Free Markets Are a “Do Something” Solution

In policy debates over energy and climate change, the deck is automatically stacked against the free market. Whatever the alleged problem—dependence on foreign oil, manmade global warming, air pollution — the politicians can pose as saviors by swooping in with new regulations, mandates, and taxes to “fix” it. When the critics point out that these alleged solutions will only make things worse, most people don’t care: At least the interventions want to do something about the problem.

In this context, it is refreshing to see a new paper at the National Bureau of Economic Research by Alan Barreca et al., titled, “Adapting to Climate Change: The Remarkable Decline in the U.S. Temperature-Mortality Relationship over the 20^th Century.” Here’s the abstract:

Adaptation is the only strategy that is guaranteed to be part of the world’s climate strategy. Using the most comprehensive set of data files ever compiled on mortality and its determinants over the course of the 20th century, this paper makes two primary discoveries. First, we find that the mortality effect of an extremely hot day declined by about 80% between 1900-1959 and 1960-2004. As a consequence, days with temperatures exceeding 90°F were responsible for about 600 premature fatalities annually in the 1960-2004 period, compared to the approximately 3,600 premature fatalities that would have occurred if the temperature-mortality relationship from before 1960 still prevailed. Second, the adoption of residential air conditioning (AC) explains essentially the entire decline in the temperature-mortality relationship. In contrast, increased access to electricity and health care seem not to affect mortality on extremely hot days. Residential AC appears to be both the most promising technology to help poor countries mitigate the temperature related mortality impacts of climate change and, because fossil fuels are the least expensive source of energy, a technology whose proliferation will speed up the rate of climate change. [Bold added.]

The beginning of the abstract is straightforward enough; it is yet another example of the sort of thing documented by Julian Simon: Generally speaking, human beings with their wonderful minds, find ways to make life better over time—even if “objectively” things should be getting worse. That is why, for example, energy has become cheaper according to various metrics—most notably, the number of hours a worker must labor in order to obtain objective amounts of energy—and even the “number of years remaining at current rates of consumption” have risen for certain energy sources, despite their finite nature.

In our present context, this Simonian pattern is evident in the decline in mortality rates from heat in the United States, even though (as the climate alarmists tell us repeatedly) the U.S. has gotten warmer since industrialization. The rise of widespread air conditioning, made possible by capitalism, is the most obvious explanation.

Finally, note what the researchers say at the tail end of their abstract, which I’ve put in bold above. If we agree that the single best way to spare human heat-related deaths is the rapid proliferation of air conditioning, then this means we should be willing to accept faster climate change (if the conventional theory of manmade global warming is correct), since fossil fuels are cheaper right now. In other words, the fastest way to provide air conditioning to the hundreds of millions of people on Earth who are currently vulnerable to heat death, is to accelerate the development of unfettered capitalism in their regions, giving them access to air conditioning and inexpensive electricity.

It is very fashionable to be “for” something, such as a giant carbon tax or subsidies for “green” energy. Yet the people who argue that these are ineffective policies have a solution themselves: Allow free markets to work the same magic abroad, that they did in the United States. This is an empirically proven strategy.